Most new California statutes take effect on January 1. Unlike some states, California’s legislature meets for about 10 months every year, so normally there is lots of legislative activity. 2023 was, by California standards, relatively quiet for new or amended laws of interest to property and casualty insurers.
Relatively quiet does not mean silent, however. There were new laws affecting civil discovery and civil procedure, motor vehicle financial responsibility, limitations on underwriting actions for liability policies for health care providers, the Insurance Privacy Act, and fraud notices.
Civil Discovery and Procedure
California continued to inch towards the disclosure rules used in federal court. Under SB235 any party may now demand disclosures, thereby obligating all parties to make disclosures similar to those required by Federal Rule of Civil Procedure 26. Unlike the federal rule, the California rule requires disclosure of non-insurance indemnification agreements, reservation of rights or declination letters by an insurer, and copies of policies. Unlike federal practice, there is no requirement to include a damages calculation in the disclosures. The amended statute is Code of Civil Procedure § 2016.090.
California also increased the jurisdictional limit for Small Claims matters to $12,500 and the jurisdictional limit for “Limited Civil” cases to $35,000. SB71.
Medical Professional Liability Underwriting
AB571 adds Insurance Code § 11589.1 which prohibits professional liability insurers from refusing to issue, non-renewing, or cancelling professional liability policies issued to health care providers if that action is solely based on the health care provider’s provision of abortion, contraception, or gender-affirming health care that are lawful in California, even if the laws of another state create potential or actual liability for performance of those services in California.
Insurance Privacy Act
SB793 modifies the Insurance Information and Privacy Protection Act by codifying existing Department of Insurance regulations requiring insurance licensees to give notice of their privacy practices.
Fraud Notices
Existing California law requires insurers to include fraud warnings on applications and certain other forms. SB743 makes that requirement more broad so it includes forms used to amend coverage or when a policyholder or applicant furnishes information relating to underwriting criteria under existing policies.
Motor Vehicle Financial Responsibility Limits (in 2025)
For the first time in close to 50 years, California is increasing the minimum financial responsibility requirements for drivers of private passenger automobiles, which have been at $15,000 per person, $30,000 per accident, with $5,000 for property damage for decades. AB1140 made a number of changes to insurance laws, including laws related to credits for ceded reinsurance and interinsurance exchanges as well as the financial responsibility minimums. For policies issued or renewed after January 1, 2025 the minimum limits for private passenger automobile insurance will increase to $30,000 per person, $60,000 per accident, and $15,000 for property damage. As noted, this law will not apply to policies issued or renewed in 2024.
